Fighting a losing battle at home

Recently, a news media outlet revisited an old problem that is getting more severe, namely the proliferation of small businesses run by foreigners. While the law allows foreigners to set-up businesses here and the country welcomes foreign investments, however, these sort of foreign owned small businesses do not bring any economic or financial benefits to the country.

On the contrary, the foreign owned entity takes away business opportunities from the local micro, small and medium-sized enterprises (MSMEs) and at the same time the money earned here are sent back to their respective home countries. By employing their own nationalities, these businesses do not provide employment opportunities. In a nutshell, these type of odd businesses do not contribute even a penny to our economy and are also preventing Malaysians from earning a decent living.

So why is it that our local MSMEs aren’t giving those foreign owned businesses a healthy competition despite its home ground advantage? Well, the funny part is, the home ground advantage actually goes to those foreign businesses simply because they are here to serve their own nationality.

An NGO recently stated that there are over 6 million foreign workers in the country. That is about a quarter of our population and that number is far more than the Malaysian Indians. If the Malaysian Chinese population continues to decrease and the demand for foreign workers keep increasing, very soon, the foreign workers will form the second largest population in Malaysia. Even at the current number, it is already a sizeable market.

While there are some quarters that have tried to put up a few suggestions to tackle this issue, in my opinion, I don’t see how it can help mitigate the problem at large. The reality is, we can’t stop Malaysian ladies to marry these foreigners (most use their local spouse’s name to incorporate a business entity) and we can’t stop them to set-up a legitimate business.

Since the existence of these businesses are to cater to the 6 million foreign workers, the root of the problem is the large number of the foreign workers in the country. Some say we need them since the locals do not want to work at the construction, agriculture or manufacturing sectors. But what about the F&B or the service industries which are also very dependent on foreign labour too?

Whichever sector it may be, for more than a decade, I have been highlighting the need to increase productivity in order to reduce the reliance of foreign labour. For as long as we think cheap labour is the way to operate (whether it is running a business or an economy), the country will continue to experience billions of ringgit in capital out fl ow each year and I fear that we may not be able to achieve our aspiration to become a high-income nation by 2024.